Not everyone in the market had a terrible summer. If Robert Iger, president and chief executive of the Walt Disney Company, had his Blackberry glued to his ear at the beach he was probably unusual in that he must also have had a smile on his face.
Walt Disney priced $1.85 billion of five-, 10- and 30-year senior notes on August 17 at record lows: $750 million five-year notes at 1.35%, $750 million 10-years at 2.75% and $350 million 30-years at 4.375%. The single-A rated company was not alone in being able to tap the market at very attractive spreads in August – despite the wrenching turmoil in the equity markets and the downgrade of the sovereign by Standard & Poor’s.
During a week of frantic lobbying and market volatility in anticipation of the US breaching its debt ceiling limit on August 2, single-A rated Air Products and Chemicals launched a $300 million deal and triple-B Sunoco Logistics a $600 million issue, both of which were oversubscribed and tightened. "There has been a huge demand for corporate credits, which are viewed as a flight to quality," says one DCM banker. Even tricky sectors such as tobacco have attracted record demand, with triple-B rated Lorillard seeing investors scrambling to get on the ticket for its recent $500 million trade.
